OfReg consultancy expenses balloon to $2 million

From its creation in January 2017 through June of this year, the Utility Regulation and Competition Office, known as OfReg, spent nearly $2 million on consultancy and professional fees, according to records obtained from a Freedom of Information request.

The $1,922,876 in consultancy and professional expenses through the first 18 months of OfReg’s existence is already some $200,000 more than the regulator had budgeted for 2017 and 2018 combined. OfReg spent $1,052,451 on such expenses last year, which was $177,368 over budget.

Some of the expenses incurred by the regulator were from contracts signed in 2016 by legacy regulators before they were consolidated into OfReg.

OfReg’s biggest expense for regulatory-related consultancy services was $317,128 to the Canada-based Rockwater International Communications Advisors Inc., whose executives include Frans Vandendries, the former vice president of legal, regulatory and corporate affairs for Cable & Wireless in Cayman through 2014. According to the agreement between the two parties, Rockwater is paid to “provide expert regulatory and policy advice” to OfReg.

Other regulatory consultancy expenses include $23,888 paid to Charles Farrington, who was the executive director of OfReg’s energy and utilities office until he retired in 2017. After his retirement, Mr. Farrington continued to assist OfReg in implementing the National Energy Policy, negotiating the renewal of the operating license for the Cayman Water Company, and “provide general guidance to staff on Energy and Utilities regulation and related matters,” according to his consultancy agreement.

Another former government regulator who continued to assist OfReg is Glen Daykin, who was the acting head of the Information and Communication Technology Authority from November 2013 to June 2014, when he was replaced by current telecommunications director Alee Fa’amoe. Mr. Daykin was later contracted to assist in processing licensing applications, provide website support, and provide general guidance to staff on ICTA-related matters.

For instance, the regulator spent $122,613 on Financial Integrated Services Ltd., in part to “act as Chief Financial Officer for the Authority.” Financial Integrated Services was hired, among other things, to prepare monthly reports for government, prepare quarterly reports for OfReg’s board of directors, and ensure accurate and timely collection of license fees from licensees.

Jason Abraham, whose LinkedIn page states that he worked as an energy and utilities analyst for OfReg through July 2017, was also contracted on July 28, 2017 to draft OfReg’s annual plan and budget for 2018.

Additional expenditures went toward public relations and human resources services.

One HR-related expense was $6,900 paid to Kerage Ltd. for “human dynamics training.” Kerage’s website states that the company’s “approach is to find, document, implement, and track the changes that deliver big positive results, quickly.

“In general, we categorise our work into four key areas. Working with management, we provide expertise in Alignment, Accountability, Sustainability and Toolsets.”

Kerage’s training with OfReg involved three coaching sessions, according to Kerage’s contract: an initial workshop that entailed Kerage issuing a “Styles Indicator” for each OfReg member, a follow-up workshop where Kerage would “show participants how the different Styles interact with each other,” and a final workshop where Kerage was to “follow-up with participants for individual coaching to support their application of Styles to determine how they will use it going forward.”

For PR services, OfReg has spent $36,753 on former publicist Kelly Holding, and at least $18,143 on its current publicist, Fountainhead.

Services provided by Fountainhead have included the creation of cartoon characters “Professor Fibre” and “Engineer Ellie,” whom OfReg said are a part of “a new campaign to help the people in Cayman understand the role of the regulator and the work that OfReg is undertaking on behalf of the consumer.”

OfReg and Fountainhead introduced Professor Fibre in a July press release, saying that he is a “young professor determined to help people understand that high quality telecommunications connectivity is no longer considered a luxury, and that in several countries, is now considered a right.”

“Professor Fibre welcomed his new role at OfReg by saying: ‘I am delighted to be a part of this wonderful team of dedicated people. We have a lot of ground to cover in explaining the value of quality telecommunications connectivity to everyone in Cayman and I am keen to get started,’” the press release stated.

Both Professor Fibre and Engineer Ellie have their own websites and social media pages, where they provide safety tips and other educational tidbits about internet and other public utilities.

“Tenants must notify the gas supplier of any structural or other changes which might affect the gas installation. #LPGSafetyTips,” states a recent tweet from Engineer Ellie.

OfReg’s largest overall expense has been $413,218 on legal fees, due in large part to an ongoing court case the regulator has against Caribbean Utilities Company subsidiary DataLink Ltd. The case involves DataLink challenging restrictions OfReg made on the fees charged to telecommunications companies to hang their fiber-optic cables from telephone poles.

OfReg has explained that it needs to spend millions on consultants because its staff lack the skills to carry out the office’s regulatory work.

OfReg’s 2017 annual report states that it is “endowed with a small group of enthusiastic, willing and dedicated staff” but that “the organization currently lacks, in house, the range of requisite skills to perform its regulatory work.”

Therefore, OfReg “must rely on consultant help,” states the report, which also shows that in 2017, OfReg spent $2,228,992 on salaries and benefits for a “total full-time equivalent staff” of 22 people – about $100,000 per employee.

The 2017 report explains that OfReg is working to train its staff to be “the best of the best,” and is also committed to recruiting economists, engineers and lawyers who have the skills to succeed at the office.

“The expectation is that in the short- to medium-term, consulting and training costs will be high,” the report states, “but consulting costs will trend downwards as the effects of the training and development initiatives are realized.”

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